Term insurance is a type of life insurance policy; availed to secure the financial future of loved ones. You do not want your family to suffer or face any financial difficulty on an untimely demise. So, to offer your family the best financial support and protection, it is very important to avail a term life insurance plan.
Term insurance is a back-up plan which offers financial protection to your family in case of any eventuality. This article aims to identify the right term life plan; by identifying the most important aspects of term insurance.
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The first step you must take when purchasing a term insurance policy is access the cover you need. Calculate the amount you need to cover all your family obligations and pay off your debts. Consider the lifestyle expenses of your family; while assessing your term insurance cover. Set the cover in such a manner that your family will not face any financial difficulty in your absence.
Choose the term life plan which is most suitable for your family’s requirements. You can choose a term plan with a fixed premium across tenure, or you can select a term life plan where the sum assured increases each year.
Choose the payout of term life plan as lump sum or staggered payout. If your family finds managing money difficult, opt for staggered payouts.
See Also: Benefits of Buying Term Insurance Online
The term insurance premium is an important factor; which heavily influences the decision of purchasing the policy. The premium charges vary across insurers; yet it is affordable vis-a-vis other life insurance products. The premium charges do not define the reliability and efficiency of the term life plan.
An expensive term plan does not mean the policy offers the best benefits; whereas a low premium; doesn’t make the term life plan useless. While purchasing a term plan, make sure to compare, based on features and benefits. Look for customer reviews before making the final purchase.
Term insurance can be availed not only to cover the risk of death, but also other risks like accidents, critical illness, accidental disability, which can impact the financial stability of your dependents.
Most of the insurers offer added advantages in the form of term insurance riders; which help the insured cover additional risk and can be included in the base term policy, just by paying an extra premium.
While choosing an insurer; make sure to consider the policy that offers a host of add-on riders. The riders are important as they allow modification of your base term policy; according to changing requirements like increase in income, change in medical conditions and so on.
Another important factor you must consider while purchasing term insurance policy is the claim settlement ratio. Before you finalize the insurer; make sure to check the number of claims settled by the insurer.
The claim settlement ratio gives the number of claims settled by the insurer; against the total number of claims registered. Claim settlement ratio is important to understand the reliability of the insurer and the intention to settle claims.
Another indicator of the insurer’s stability is solvency ratio. Solvency ratio can be defined as the measure used to determine the insurer’s ability to pay off debts and obligations in the future. The solvency ratio indicates whether the insurer has good cash flow and whether it can meet the long-term and short-term obligations. A higher solvency ratio is a sign of stability. Your insurer will be able to honour nominee claims when a claim is filed.
While finalizing your term insurance plan; make sure to do the research on the customer care service of the insurer. It is advisable to look for an insurer; which offers good assistance and is customer-friendly. This feature is beneficial after availing the term life policy. If you have any issue after purchase, the customer care executives will help you resolve it.
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